Apollo Said to Be in Lead to Buy Aviva U.S. Life Unit

Apollo Global Management LLC is in the lead to buy Aviva Plc’s U.S. life insurance and annuities unit, positioning the buyout firm to beat Philip Falcone’s Harbinger Group Inc., said people with knowledge of the matter. Photographer: Chris Ratcliffe/Bloomberg

Nov. 15 (Bloomberg) -- Apollo Global Management LLC is in
the lead to buy Aviva Plc’s U.S. life insurance and annuities
unit, positioning the buyout firm to beat Philip Falcone’s
Harbinger Group Inc., said people with knowledge of the matter.

Apollo is pursuing a joint bid with Guggenheim Partners
LLC, said one of the people, who asked not to be named because
the negotiations are private. A sale would occur at a
“substantial discount” to the unit’s book value, excluding
debt, of 2.4 billion pounds ($3.8 billion), Aviva Chief
Financial Officer Pat Regan said last week.

Apollo, the private-equity firm run by Leon Black, last
month boosted capital at its Athene Holding Ltd. annuity
business by contributing assets valued at more than $800 million
from a publicly traded fund it manages. That deal will allow
Athene to buy more annuity assets “in the near to medium
term,” and eventually achieve the scale to issue shares to the
public, according to a presentation for the fund’s investors.

The Apollo-Aviva deal isn’t completed and may still
collapse. Representatives at Aviva, Apollo, Guggenheim and
Harbinger declined to comment.

Annuities are contracts, often issued by life-insurance
companies, that offer guaranteed income for retirees. Apollo
created Athene in 2009 and expanded in 2011 through the $628
million purchase of Royal Bank of Canada’s U.S. life insurance
unit. Athene in July agreed to buy Presidential Life Corp. for
about $415 million.

Aviva, the U.K.’s second-biggest insurer by market value,
is selling or winding down almost a third of its 58 businesses,
striving to get out of less profitable markets and boost capital
reserves reduced by the European sovereign-debt crisis. Aviva
acquired most of its U.S. operations through the $2.9 billion
purchase of Des Moines, Iowa-based AmerUs Group Co. in 2006.